Osborne tells the same old story but this isn't a "Same Old Tory" Budget

Much of politics is about telling stories and one of the most successful tales woven in recent years is the one by the Chancellor about the spendthrift Labour government and the frugal coalition. The metaphors change – sometimes Gordon Brown didn’t mend the roof; sometimes he maxed out the national credit card; sometimes he crashed a car – but the underlying message is simple and it works. It is that Britain has no money because the last government spent it all, which explains why we are all feeling the pinch now, why life has been tough and, above all, why it would be a terrible idea to vote for Ed Miliband.

In historical and economic terms this account is silly and mendacious. It has proved, however, to be bloody effective. Crucially, it permitted an alignment of people’s understanding of their domestic finances – when you’ve borrowed too much you have to stop spending – with an accessible narration of the national financial challenge. It made sense of the need for austerity.

Now, at this point the Keynesians tear out their hair. The opposite is true, they cry. When the private sector retrenches, government must step in. If everyone stopped spending all at once, including the state, there would be a shortage of demand and the economy would grind to a halt. As indeed it did in the early years of this parliament. But as has been written countless times, Keynes’s Paradox of Thrift is a lot harder to explain in pithy soundbites than Osborne’s Parable of Paying Down Debts, (which, incidentally, he hasn’t done).

There was a moment in 2012 when it looked very much as if Osborne’s plan was over. The economy was stagnant; all of his original targets for deficit reduction and debt containment had been abandoned. At the time, the Treasury was saying that eurozone turbulence and other unforeseen events - snow; extra bank holidays - had blown things off course a little but the underlying programme was the right one and everything would be alright in time. Labour derided the Tories for suffocating growth by cutting “too far, too fast.” As it turns out, senior Tories were much more anxious at that time than they were letting on. (“Shitting themselves that growth wasn’t coming back,” is how one former advisor recently described the mood to me. Perhaps this is what Osborne had in mind when he boasted today that “we held our nerve.”)

All of that preamble helps make sense of the big political message in today’s Budget.

Labour somehow failed to pin the blame for stagnation on the government. Or rather, Ed Balls and Ed Miliband didn’t manage to scrub themselves clean of the pre-emptive blame that had been heaped on Labour. And now the economy is recovering, with growth established and unemployment falling. Osborne slipped the noose, which means he is free to tell the next chapter of his story. This time it is about saving. The Chancellor’s most significant announcements today were aimed at people – mostly but not exclusively pensioners – whose biggest complaint in recent years has been that interest rates are too low. For anyone with a variable rate mortgage, that has been a blessing and, as Osborne said in his speech, keeping money cheap has been a very deliberate strategy to support the economy. But it does mean savers and anyone planning to retire on the basis of their savings has felt pretty ripped off. Hence new super ISAs, special pensioner bonds, tax cuts and reliefs that make it easier for older people to earn better rates on their money and access more of their pension pot without being stung by HMRC.

At one level this is a straightforward pitch to older, middle class voters who were once reliably Tory but might now be leaning towards Ukip. It is the Chancellor looking after his party’s people, which is exactly what Chancellor’s always do. But the clever part is how it fits into the bigger narrative of national repair. It is a technical move – complex enough that many political journalists’ faces dropped as the prospect of an afternoon of numerical intricacy loomed. But it is also a thematic gesture, supporting Osborne’s longer narrative of prudence and frugality in implicit contrast with Labour’s wastefulness. He is renewing his domestic simile. He wants people to continue thinking of the national economy as they think of their own finances – after the belt-tightening comes the saving for a rainy day.

Although the Chancellor was careful not to declare that his austerity mission is anything like accomplished, he does claim that progress so far has been substantial and that only the Conservatives can be trusted not to blow it all. Osborne spoke about “gains that were hard-won by the British people” and warned against “going back to square one.” This plea to let the incumbent team (minus Lib Dems, ideally) finish the job is the central plank of the Tories 2015 general election offer.

To reinforce that message the Chancellor had to sound as if he was thinking for the long term. Much of the budget was dedicated to the ambition to rebalance the economy, which is something all parties claim they want to do. It means supporting regional growth, boosting exports and helping manufacturers, thus ending Britain’s traditional reliance on financial services and credit-fuelled consumer spending.

The interesting thing here is that Osborne’s language was all about intervention. He wants to build houses, underwrite exports, found research centres, fund local enterprise zones, fill pot holes and lay train tracks. This is more Heseltine than Thatcher (a feature of Treasury thinking I’ve written about before). Of course Labour will say it's all for show – too little, too late, old announcements recycled and rehashed etc. Yet it is significant that the Chancellor is not anywhere near as dogmatically laissez faire as many of his critics presume. His recognition that the hand of government can and should be involved in the task of making Britain competitive would have been quite sacrilegious in top Tory circles before the last election. But then again, this is the man who racked up deficit spending and borrowing at the bottom of a recession while bringing forward infrastructure investment in a desperate bid to kick-start growth.

Osborne’s little intellectual secret is that, back in 2012, when Treasury pants were being soiled about the state of the economy, Keynesian methods made a discreet, modest comeback. The Chancellor’s plan is now nothing like the one he had four years ago. It has been mangled and rewritten as a peculiar hybrid of Peter Mandelson-style “strategic state” intervention, orthodox tax-cutting dry Thatcherism and a bit of Gordon Brown-esque technical jiggery-pokery.

That is one reason why Labour finds it consistently difficult to attack. Ed Miliband’s response in parliament didn’t even bother with the detail of what had just been announced. (Fair enough, really, given that didn’t get to see any of it in advance.) The opposition leader instead played out the greatest hits album of Labour attack lines: out of touch Etonians, tax cuts for millionaires, cost of living crisis and the all time classic Same Old Tories. Except it didn’t work on this occasion because, much though he looks and sounds the part, Osborne isn’t the typical old Tory from central casting. His thinking and his policy are more subtle than that and more complex. What disorients and enrages Labour is his capacity to sell it as a simple story.

Hannan Fodder: This week, Daniel Hannan gets his excuses in early

Since Daniel Hannan, a formerly obscure MEP, has emerged as the anointed intellectual of the Brexit elite, The Staggers is charting his ascendancy...

When I started this column, there were some nay-sayers talking Britain down by doubting that I was seriously going to write about Daniel Hannan every week. Surely no one could be that obsessed with the activities of one obscure MEP? And surely no politician could say enough ludicrous things to be worthy of such an obsession?

They were wrong, on both counts. Daniel and I are as one on this: Leave and Remain, working hand in glove to deliver on our shared national mission. There’s a lesson there for my fellow Remoaners, I’m sure.

Anyway. It’s week three, and just as I was worrying what I might write this week, Dan has ridden to the rescue by writing not one but two columns making the same argument – using, indeed, many of the exact same phrases (“not a club, but a protection racket”). Like all the most effective political campaigns, Dan has a message of the week.

First up, on Monday, there was this headline, in the conservative American journal, the Washington Examiner:

“We will get a good deal – because rational self-interest will overcome the Eurocrats’ fury”

The message of the two columns is straightforward: cooler heads will prevail. Britain wants an amicable separation. The EU needs Britain’s military strength and budget contributions, and both sides want to keep the single market intact.

The Con Home piece makes the further argument that it’s only the Eurocrats who want to be hardline about this. National governments – who have to answer to actual electorates – will be more willing to negotiate.

And so, for all the bluster now, Theresa May and Donald Tusk will be skipping through a meadow, arm in arm, before the year is out.

Before we go any further, I have a confession: I found myself nodding along with some of this. Yes, of course it’s in nobody’s interests to create unnecessary enmity between Britain and the continent. Of course no one will want to crash the economy. Of course.

I’ve been told by friends on the centre-right that Hannan has a compelling, faintly hypnotic quality when he speaks and, in retrospect, this brief moment of finding myself half-agreeing with him scares the living shit out of me. So from this point on, I’d like everyone to keep an eye on me in case I start going weird, and to give me a sharp whack round the back of the head if you ever catch me starting a tweet with the word, “Friends-”.

Anyway. Shortly after reading things, reality began to dawn for me in a way it apparently hasn’t for Daniel Hannan, and I began cataloguing the ways in which his argument is stupid.

Problem number one: Remarkably for a man who’s been in the European Parliament for nearly two decades, he’s misunderstood the EU. He notes that “deeper integration can be more like a religious dogma than a political creed”, but entirely misses the reason for this. For many Europeans, especially those from countries which didn’t have as much fun in the Second World War as Britain did, the EU, for all its myriad flaws, is something to which they feel an emotional attachment: not their country, but not something entirely separate from it either.

Consequently, it’s neither a club, nor a “protection racket”: it’s more akin to a family. A rational and sensible Brexit will be difficult for the exact same reasons that so few divorcing couples rationally agree not to bother wasting money on lawyers: because the very act of leaving feels like a betrayal.

Problem number two: even if everyone was to negotiate purely in terms of rational interest, our interests are not the same. The over-riding goal of German policy for decades has been to hold the EU together, even if that creates other problems. (Exhibit A: Greece.) So there’s at least a chance that the German leadership will genuinely see deterring more departures as more important than mutual prosperity or a good relationship with Britain.

And France, whose presidential candidates are lining up to give Britain a kicking, is mysteriously not mentioned anywhere in either of Daniel’s columns, presumably because doing so would undermine his argument.

So – the list of priorities Hannan describes may look rational from a British perspective. Unfortunately, though, the people on the other side of the negotiating table won’t have a British perspective.

Problem number three is this line from the Con Home piece:

“Might it truly be more interested in deterring states from leaving than in promoting the welfare of its peoples? If so, there surely can be no further doubt that we were right to opt out.”

I could go on, about how there’s no reason to think that Daniel’s relatively gentle vision of Brexit is shared by Nigel Farage, UKIP, or a significant number of those who voted Leave. Or about the polls which show that, far from the EU’s response to the referendum pushing more European nations towards the door, support for the union has actually spiked since the referendum – that Britain has become not a beacon of hope but a cautionary tale.

But I’m running out of words, and there’ll be other chances to explore such things. So instead I’m going to end on this:

Hannan’s argument – that only an irrational Europe would not deliver a good Brexit – is remarkably, parodically self-serving. It allows him to believe that, if Brexit goes horribly wrong, well, it must all be the fault of those inflexible Eurocrats, mustn’t it? It can’t possibly be because Brexit was a bad idea in the first place, or because liberal Leavers used nasty, populist ones to achieve their goals.

Read today, there are elements of Hannan’s columns that are compelling, even persuasive. From the perspective of 2020, I fear, they might simply read like one long explanation of why nothing that has happened since will have been his fault.

Jonn Elledge is the editor of the New Statesman's sister site CityMetric. He is on Twitter, far too much, as @JonnElledge.